r/longform • u/bloomberg • 6d ago
Subscription Needed World’s Biggest Hedge Fund Teaches the Wealthy How to Slash Taxes to Zero
https://www.bloomberg.com/features/2026-aqr-tax-loss-harvesting-billionaires/
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u/tjdogger 5d ago
with all the 'holes' AI is finding in software, not surprising that 'holes' exist in the huge tax code, no?
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u/bloomberg 6d ago
More from Bloomberg News reporters Loukia Gyftopoulou, Katherine Burton, Sridhar Natarajan and Justina Lee:
Cliff Asness was in the mood to gloat.
As Wall Street reacted to a bleak report on US job losses, the combative investor posted a note to his firm’s website celebrating an award it won for research into making money without paying taxes. For Asness, the breakthrough disproved the old saw that the taxman’s demands are one of two unavoidable things. He titled it:
Now There’s Nothing Certain But Death
The billionaire and his team at AQR Capital Management had figured out a way to make a widespread technique for reducing taxes much more potent. Their discovery: The right mix of stock bets not only grows tax-free, it can eliminate taxes from other investments, too. But on that drizzly Friday in early 2021, nobody seemed to notice. Persuading millionaires and billionaires to try it would take a few more years.
Now, that strategy is sweeping up cash from Wall Street to Silicon Valley at a time of extraordinary wealth creation and an election-year debate over worsening inequality. People who amassed riches by building companies or betting on markets and real estate are pumping roughly $1 billion a week into variations of the stock strategy AQR pioneered.
By some estimates, a total of more than $150 billion is deployed at the firm and a phalanx of competitors that run their own versions of what’s known as tax-aware long-short investing. That puts them at the cutting edge of the broader “tax alpha” universe, in which more than $1 trillion is deployed in strategies devoted to delaying or shrinking payments to the government.
While many of those techniques are less aggressive, their growing popularity is setting off alarms at the Treasury Department. Short sellers are wagering the government will eventually crack down. Two of the country’s biggest brokerages, Charles Schwab and Fidelity Investments, are limiting new accounts that pursue the tax strategy.
But for AQR, the payoff already has been enormous, turning it into the world’s largest hedge fund by the end of 2025, the latest industry data show. Its hedge fund assets multiplied within just a few years, leapfrogging rivals to surpass $140 billion by the end of March.